As your clients continue to be impressed with your deep insights and accurate forecasting through RightCapital, demonstrate the power of optimized social security withdrawals to maximize your client's assets over time. With over 700 filing strategies, this tool simplifies a complex task and makes you look good!
The value displayed on the right-hand side is the total difference in income received from Social Security between the two compared social security strategies.
To learn how to add Social Security income to a client's plan, read the article on adding Social Security Income to a client's Plan.
Optimizing Social Security
The optimal Social Security strategy is calculated on a per-client basis to maximize the dollars the client(s) will receive through Social Security. All potential starting ages are considered, and spousal and survival benefits are incorporated. The tool considers client ages, relative benefit values, planning horizons, and a discount rate that reflect the impact of receiving and investing Social Security income earlier into the optimization. This sophisticated computation considers hundreds of options using many variables - this is a hearty and robust social security optimizer!
After RightCapital considers all the inputs provided on the client's plan and has calculated the best option, the result is presented simply and clearly in the Action Items:
Powerfully demonstrate your ability to help your clients achieve their preferred retirement lifestyle by comparing the optimal social security strategy with the other common social security strategies, as provided in the drop-down menu.
Many advisors indicate that this one tool from RightCapital is able to grow their book of business and secure clients for many years.
Hovering over the graph reveals the point values for the point on the graph which is being hovered over.
Setting a Discount Rate
The optimization tool also allows users to incorporate a discount rate when calculating the optimal Social Security strategy. This gives advisors the ability to reflect the impact of receiving Social Security income earlier and investing it rather than delaying income to receive a larger amount.
The Optimal Strategy can be incorporated into a client's retirement plan by selecting it as the Social Security strategy under the Retirement Analysis Action Items.
How is the current Social Security strategy calculated?
If the client is already receiving benefits, RightCapital will include the amount specified in the Social Security card on the Profile > Income page as their benefits. RightCapital will also make adjustments for spousal or survivor benefits.
- Use simple estimate: The projected full retirement benefit is calculated by discounting their salary backward and forward to generate a history of earnings.
- Based on SS statement value: Enter the estimated retirement benefit by age as calculated by the SSA.
- Based on Historical Covered Earnings: Input their history of earnings as a table by year, and RightCapital will utilize those as well as their projected salary to calculate their full retirement benefit.
Once the full retirement benefit is determined by one of the above methods, RightCapital will reduce it if the client takes benefits prior to their full retirement age and apply delayed credits if they wait to take benefits, based on SSA guidelines.
The current strategy will also automatically include spousal and survival benefits when appropriate.
How is the Optimal Social Security strategy calculated?
The optimal strategy is determined by running through numerous scenarios based on the client and spouse's ages, planning horizons, and relative incomes and reflects the strategy that maximizes the total dollars they will receive through Social Security. This includes any applicable spousal and survivor benefits, child benefits, the impact of earnings tests, and discount rates when enabled.
The Summary chart shows the total income received from common filing strategies along with the current and optimal filing methods.